The Future of Fair Trade

Posted on April 20, 2011


As people become increasingly aware of how the global market works, it is only natural that there will be a demand for greater transparency. We all want to know where our food, paper products, construction materials, jewelry, etc., comes from so that we can make informed choices about the products we consume. Some companies and organizations are working to make this process easier by engaging in Fair Trade practices. But what exactly is Fair Trade?

The name itself conjures up images of happy smiling people receiving a fair wage for their time and a fair price for the goods they produce. While this is certainly part of the picture, it doesn’t tell the whole story. Fair Trade is a regulated term. Companies must be certified by an outside agency to receive the designation. A large umbrella group, Fair Trade Labeling Organizations International, or FLO, helps to oversee the smaller labeling initiatives (Like Transfair, which oversees US certification.) and make sure their standards remain consistent. FLO-CERT does on the ground monitoring and testing to be sure that Fair Trade standards are met.

Specific standards vary according to the product, country, and method of production. There are separate standards for small businesses, cooperatively run ventures and purchasers of Fair Trade products. You can view the set standards for any country, business model, or product on the FLO website. Not all items have set standards and so not all items can be certified. In the US coffee, tea and herbs, cocoa and chocolate, fresh fruit, sugar, rice, and vanilla may all receive certification.

These standards generally cover the following topics: Fair Pricing- producers must be paid a fair market price for their goods. The price must cover cost of living and an additional premium which can be invested in community resources and business improvements. Community Development establishing scholarship programs, training opportunities, and additional certifications. Fair labor conditions- hired workers must be paid fairly, allowed to form unions, and provided with safe working conditions. Direct trade- importers must deal directly with producers instead of intervening third parties. Democratic and transparent organizations- must be run cooperatively or allow for feedback from workers and producers. Environmentally sustainable- no GM (Genetically Modified) crops may be grown, certain harsh chemical agents are banned, and Organic Certification and farming practices are encouraged.

Despite these standards, nobody’s perfect. There are several criticisms of the Fair Trade system as it operates today. First and foremost are the financial issues. Producers, even very small ones, must pay yearly fees in order to gain and keep Fair Trade Certification. High fees can be serious a problem for farmers or producers who can barely afford to feed themselves. They simply cannot afford the certification that would enable them to demand higher prices. Of course minimum pricing can also cause problems as well as solve them. While the FLO does set minimum prices these prices often cannot be adjusted to reflect regional economic differences or variation in the quality of the product. So producers cannot charge any more for their highest quality goods than they do for their lowest. And an artisan in Tiny Town U.S.A. might be paid the same as one in Washington D.C. despite obvious disparities in their cost of living.

Aside from the financial issues there are other concerns. Most of these involve Fair Trade Labeling. A company that imports one type of Fair Trade coffee and fifteen types of conventional coffee will receive the same acknowledgement as one that imports Fair Trade products exclusively. This can make it difficult for consumers to remain informed about which organizations they want to support. There is also no regulation of companies who claim to “trade fairly” with their suppliers. Any company can claim this type of importer/producer relationship without applying for Fair Trade Certification so long as they do not use the TransFair seal. The only way to be sure in these situations is to contact the importer and ask for documentation, or to contact the producer directly.

Reality is a tricky thing, and no logo or seal can solve all of our problems or answer all of our questions. Each consumer must make up his or her own mind. Despite the issues discussed here Fair Trade Certified products are still a better option than conventionally produced and imported goods in most cases. Companies that truly develop personal relationships with their suppliers are also a good choice, as they have the flexibility needed to address some of Fair Trade’s shortfalls on a one to one basis. But no matter how you choose to shop, learning to ask these questions is a step in the right direction!

If you want to learn more check out these links:
FLO Cert-

This article was first written for an issue of the GreenTree Co-op newsletter.